Binance loses its biggest target in crypto market amid CFTC lawsuit

Binance loses its biggest target in crypto market amid CFTC lawsuit

A U.S. regulatory agency said Monday that it was taking aim at the biggest target in crypto. Investors don't seem to care about what they're doing.

The value of crypto locked in the Binance-built BNB blockchain has dropped 2.7%, while BNB, the token that powers that blockchain, has declined 4.3% since news broke on Monday that the Commodity Futures Trading Commission had sued Binance, its founder and a former executive. A broader drop in crypto markets dwarfed those declines.

The lack of market reaction shows that traders are betting that the CFTC's actions won't disrupt Binance's operations. The lawsuit against cryptocurrency's largest exchange is the latest in a series of regulatory actions that have prompted speculation that U.S. lawmakers are carrying out a concerted effort against the cryptocurrency industry.

However, outflows from Binance's centralized exchange have also been muted. Users withdrew about $1.2B from the exchange on Monday. While substantial, that figure has been topped on two separate occasions this month alone and is less than 2% of the exchange's holdings, per Defi Llama.

Binance has made little to screen customers during their account sign-up process, so criminals and Americans can trade on its platform, according to the CFTC lawsuit.

In a statement, Zhao denied the charges. Binance's lawyers are confident Binance will survive the CFTC lawsuit.

Some attorneys flagged allegations in the report that could become fodder for a criminal investigation led by the Department of Justice. Details in the suit suggest Binance's platform had been used by criminals and entities subject to U.S. sanctions.

The Commodity Futures Trading Commission said it was suing Zhao, three of the numerous companies that operate the Binance platform, and a former Binance executive. The CFTC is seeking to fine Binance; permanently ban the company and its employees from trading commodities in the United States and claw back the money Binance earned from customers based in the United States.

Own emails and chats reflect that Binance's compliance efforts have been a sham and Binance deliberately chose - over and over - to place profits over following the law, Lowe said in a prepared statement.

Shapiro, a leading crypto lawyer, called the proposed penalties 'aggressive and potentially destructive' and acknowledged there was no guarantee a court would grant those penalties if Binance were found guilty.